Rakesh Jhunjhunwala’s biggest bet Titan Company is set to report its earnings for the first quarter of the current fiscal year on August 2, 2024. Fewer wedding dates, higher gold prices, and the election impact are expected to impact the bottom line.
According to a Moneycontrol poll of eight brokerages, the jewellery major is likely to report a nine percent revenue growth at Rs 12,185 crore. Net profit is likely to come in at Rs 711 crore, declining marginally from Rs 777 crore in the corresponding quarter last year.
There is a serious divergence in the earnings estimates of different analysts polled by Moneycontrol. The most optimistic estimate pegs Titan's profit at a growth of around five percent, but the most pessimistic outlook sees net profit tanking over nine percent on-year.
What factors are impacting the earnings?
Titan is expected to see a tepid quarter amid a lower number of wedding days, rising gold prices, and increasing competition from regional players, noted experts.
Fewer wedding dates: The April to June quarter usually has a good number of weddings on top of Gudi Padwa and Akshaya Tritiya, however, this year April-June quarter had fewer wedding dates, which led to the softening of the strong growth trajectory witnessed in the earlier quarters.
Segment performance: “For Titan, we built in a 12 percent growth in Jewellery segment (ex bullion) as the wedding season was weak this quarter. We build in 15 percent YoY growth in Watches & Wearables (Traction in wearables sustaining) and 10 percent growth in the Eyewear segment,” said Nuvama Institutional Equities.
Margins: There would be pressure on margins due to an increase in competition and gold prices. PhilipCapital modelled a consolidated segmental EBIT margin of 10.5 percent for jewellery, nine percent for watches, and seven percent for eyewear, resulting in a total consolidated EBIT margin of 10 percent.
What to look out for in the quarterly show?
Analysts will closely monitor purchase trends in H2 of the current year, with more wedding dates and festivals to boost demand. Additionally, they will also pay attention to gold prices, which have seen a drastic fall following the duty cut in the Budget 2024. This is also expected to boost retail demand. Organised players also are seeing growing competitive pressure from unorganised players.
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